All-In with Chamath, Jason, Sacks & Friedberg
In conversation with Reid Hoffman & Robert F. Kennedy Jr.
Fri, 30 Aug 2024
(0:00) Bestie intros: Buttons are back for fall (1:48) Reid Hoffman joins the show, reminiscing on PayPal stories with Sacks (7:52) State of AI: Nvidia, cluster buildouts, competition (19:51) OpenAI's corporate structure and thoughts on Elon's lawsuit (29:09) Inflection AI's deal structure with Microsoft, Lina Khan's impact on the tech industry (41:27) Reid's perspective on Kamala being hot swapped for Biden, funding groups that attempted to keep RFK Jr. off ballots (52:02) Reid's thoughts on growing antisemitism (55:03) Thoughts on Kamala's economic proposals: price caps, wealth tax, etc. (1:04:19) How Silicon Valley views both candidates, why Reid funded legal action against Trump (1:19:03) Robert F. Kennedy Jr. joins the show and recaps his campaign and decision to back Trump (1:31:13) Falling out with the Democratic Party (1:37:26) Potential role in the Trump Administration, Make America Healthy Again agenda (1:58:01) Sacks recaps RFK Jr's campaign, RFK Jr. on Trump's legacy Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow Reid Hoffman: https://x.com/reidhoffman Follow Robert F. Kennedy Jr.: https://x.com/RobertKennedyJr Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect Referenced in the show: https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-second-quarter-fiscal-2025 https://podcasts.apple.com/us/podcast/gavin-baker-ai-semiconductors-and-the-robotic-frontier/id1154105909?i=1000666758592
Welcome back to the all in podcast, the number one business technology and political podcast in the world. I am your host, Jay Cal, Jason Calacanis. And with us today, three of my besties. You got David Friedberg cackling over there. He is your sultan of science, previously known as the queen of quinoa, but he sold the quinoa business, made a killing in quinoa.
Also with us back from Italy, back from Italy, Chamath Palihapitiya. He's at 67% button. And he's not happy about it. But the hair looks great. You still got a little sea salt from the yachting.
I think I'm going to try to keep my hair long. Let's see what happens.
Did you bring any of the sea salt back with you from the Mediterranean? Put it in a little bottle to spray or no?
but I do have some mineral oil.
Oh, okay. Great. And have you showered in the last week or is it still, you got the Mediterranean glove?
Every day I've showered since I've gotten back.
See, that's the problem. You were showering in the Mediterranean.
You don't have the sea to use as a natural, you know, disinfectant and deodorant.
Exfoliant.
Exfoliant also.
Yeah. Look how many buns he's got going. I know. It's just tragic. I feel uncomfortable for your neck. I mean, it's like creeping all the way up. Your neck looks like a prisoner.
I walked here, but I had it totally unbuttoned and I thought this is completely inappropriate for Menlo Park in August. So I buttoned two buttons.
Back in business mode. He's in business casual mode. He went from casual... To business. Okay. And with us, of course, the Dark Knight himself. Yeah, the Rain Man, David Sachs. And we have a bestie guestie for you folks. Friend of my other pod, This Week in Startups, Reid Hoffman is here. And you know him as a venture capitalist board member at Microsoft.
And you were the co-founder or the founder of LinkedIn? I don't know if you had a co-founder.
Co-founder.
Co-founder of LinkedIn, now owned by Microsoft. He's got his own podcast, Masters of Scale. And he and David Sachs work together at PayPal. Welcome to the program. And give us a little story. What is your fondest memory or the most quirky memory? David Sachs and all those weirdos. I'm sorry. I'm not supposed to use the word weird anymore. I get banned on X.
All of those unique personalities at PayPal. Tell us about that moment in time. And do you remember the first time you met David Sacks?
Yeah, I met David because Peter had known him from Stanford and hired him in. And David very quickly, because he has a strong learning curve as he plays these things, kind of got the instinct of what the game we were playing with PayPal was. And it's part of the reason why I think each of the execs have had kind of key contributions to making you know, kind of PayPal successful.
And David's was this kind of like maniacal focus on the kind of the cycle of how the product worked on eBay. And like, there was just a whole bunch of stuff I learned from him. It's part of how I track, you know, kind of you know, people I respect is what do I learn from them? And that was one of the things that I would say I learned from David at PayPal. That's nice.
David, tell us your first memory of meeting Reid Hoffman. Would you remember where you were? Do you remember the conversation?
Yeah, I think when we met through Peter, you know, and Reid, I think Reid was on the board of, it was Confinity back then and then joined full time.
What were you like, 28, 27, 29? No, I mean, let's see. This would have been-
I guess I would have been 27 when I first joined PayPal, 27, 28, I guess something like that. Yeah, 99, so whatever that was. In any event, I mean, I'll just return the compliment. PayPal had all these existential issues where you had these larger entities trying to kill us. Visa, MasterCard, eBay, who else? Yeah. Oh, the lust goes on city bank. Yeah.
And Reed was kind of our emissary who kept all these dogs at bay and managed to, I guess, be friends with them, I guess, to some degree, even though they wanted to kill us. And Reed was kind of in charge of making sure that these existential issues didn't blow up on us. And they didn't. So we got pretty lucky there.
It's the Will Rogers line. It's politics is the art of saying nice doggy while you hunt for a stick.
Tell us like a moment read that is incredibly memorable to you from that PayPal era, you know, some existential moment or one of the more difficult or funny moments, late night moments that would be indicative of that era and whatever was in the water that drew all that talent to one place.
Well, part of it is that, and this is, you know, among the things I was learning from Peter, was that Peter and Max recruited just a tremendous focus on intense learning curves. So it was one of the things that Peter later was like, okay, I guess you have to interview for being on sports teams and so forth, because this teamwork thing does matter, but like high performers.
And it was kind of like a, and that was part of the reason why there was such intense learning curves you know, kind of innovation and capability. You know, probably the most stunning memory I had at PayPal is we, you know, we're all young, we're all, first time we're kind of doing a startup that matters, you know, kind of making this stuff happen.
And we do this merger with x.com and, you know, like pre the merger closing, You know, Elon is saying, oh, I got this CEO, Bill Harris. He's the best ever. That's part of the reason why you should give so much percentage of the company to x.com and the merger, you know, dah, dah, dah, dah, dah.
And then after the merger, literally the first meeting I had with Elon is Bill Harris is a complete disaster. We need to fire him right away. Like before we get to the first board meeting, we need him fired. And I'm like, Uh, Elon, you need to talk to Peter about this.
Well, I mean, he is decisive, that's for sure. All right, well, let's get into it. We want, you know, we're going to go a little bit mullet here, Friedberg. We're going to start with business and then maybe we'll have a...
Yes, exactly.
Oh, yes, the legendary Antonio's Nuthouse.
And when Bill eventually did meet his demise at PayPal, it was called the Nuthouse Coup.
He got whacked at the Nuthouse? Were the pool tables in the back he whacked at or in the books in the front?
Well, he was whacked at a board meeting, not at the Nuthouse, but certain plans were formulated at the back of Antonio's Nuthouse.
Antonio's Dunn House is, yeah, the most unhygienic bar in the Bay Area. And then that's a pretty low benchmark. Let's just leave it at that. We'll start with some business here, talk a little AI. And then since two of our panelists have a passion We'll do the party, political parties, at the end.
Everybody knows Reid was a co-founder of Inflection AI and as a general partner at Greylock and one of the founding investors also in OpenAI. There's a good story there, I'm sure. And we just got results, Reid, from NVIDIA. Results were good. They beat across the board. Stock was down after hours. Analysts said probably profit-taking.
Putting that aside, we've never seen a chart like this in the history of business, I would say. Data center revenue, 26.3 billion, 87% of their revenue now. You remember NVIDIA started obviously with video games and didn't have a major data center business. That has exploded. Net income, 16.6 billion. Gross margin, 75%. And here's your chart.
On a total basis, NVIDIA's revenue scale up is basically unlike anything we've seen. But if you look, their quarter-over-quarter revenue over the past couple of years, things are starting to cool off significantly after that giant boom. Bree, what's your take on NVIDIA's just incredible run here? Is it sustainable? Will they have competitors?
And do you think this build-out, this massive build-out we're seeing from startups to sovereigns to Microsoft, which you're on the board of, Google, Apple, et cetera, is this sustainable and is this going to keep going?
Well, I got asked that question unsurprisingly by many public market investors over the year. And I basically told them and say, hey, look, it's sustainable for two years, which for you guys means forever. Yeah. Eight full quarters. Yes, exactly. So that's infinity, right, in terms of time.
You know, NVIDIA has a very sharp, you know, kind of lead on the importance of the chips for the training clusters. You know, they're effective on inference. But I do think that as you kind of scale the demand, there'll be a lot of inference chips coming in. You know, I think... Chamath, you're invested in one of those.
And I think there's going to be a bunch of those kind of coming in and the bulk of the demand will be on the inference side. And then NVIDIA will have this challenge of, do I try to keep my prices and my margin? Or do I do what, why we like competition? Do I have to respond to the competitive market?
And then that I think will play out, you know, start playing out probably in a year, two at the latest. and then kind of go. So I think it's not sustainable. The pure heat is not sustainable, but I think it's, you know, NVIDIA's got a very strong position and, you know, I definitely, I would recommend people not be short on NVIDIA. Yeah.
So yeah, there's growth left, competition is coming. And this is probably not the type of stock you would want to short at this moment in time. Freeberg, what are your thoughts on this build out, as well as the software build out that's occurring? And when do you think we're going to see some competition come into the space?
I don't know if there's competition in the build-out. I think we talked about this in the past. And I don't know if you guys saw these quotes this week or recently on, we don't think about this build-out in terms of ROI. Gavin Baker in conversation on Invest Like the Best, is that the name of the podcast? Yeah.
I think referenced some conversations he's been having with the leaders of these companies regarding the build-out is so important because ultimately, if you create this, quote, digital god, the return is how many trillions. So it doesn't matter how many tens of billions you're spending each quarter right now. You have to get there. You have to make sure you don't miss the boat.
I guess, Reid, a question for you. You're on the board of Microsoft still, right? Yes, indeed. Has Microsoft or Satya publicly talked about how they rationalize the investing principles associated with building out AI infrastructure in the cloud? Is it ROI based? Like, hey, in the next two years, we're going to make this much additional incremental operating profit?
Or is it like, hey, we got to get this thing working?
Right, right. To be more precise, is the investment driven by ROI? Or does everyone just say, this is so strategic, we just have to win it and we'll throw all the resources we have to at this?
Well, one, board members speaking for Microsoft is forbidden. So I'm not speaking for Microsoft, just speaking for me.
Two- All cloud computing platform companies, what's your sense on how they're thinking about it?
It's just one of the principles in the Microsoft thing is the company speaks for itself, board members don't speak for them. But I think Satya is the best public market CEO of our generation. I think he is stunning in kind of blending common combination of strategic insight with also kind of being kind of return on capital, sensible risk taking, et cetera.
The actual thing between your guys' questions in terms of, because I can comment on how Satya thinks with this stuff, is he's both thinking about it's a platform change and you have to be there for the platform change, for productivity, for cloud, et cetera. And, okay, let's rationalize the capital to when are we expecting revenue?
How do we get revenue sooner to have that as a good productive cycle? How do we be not trying to just spend like drunken sailors, which is easy to do, but to be targeting business outcomes.
And it's part of the reason why he's very focused on what are we doing with Office, what are we doing with Cloud, what are we doing with... As opposed to... You rarely hear him talking about AGI or never digital gods because it's kind of the question of I am focused on this in a business sense. And I think that's kind of the way he's doing it. But there is obviously a...
you know, kind of a, it's hard to predict the future when it's novel and unknown in platforms. And it's part of the reason why you have all the hyperscalers now, you know, kind of fully engaged and intelligently engaged.
Because if you say, well, if even it's just the new platform by which, you know, kind of software, everything with a computer unit in it, whether it's a phone or a speaker or a computer or anything else, Anything with a kind of a CPU or a GPU gets more intelligent. You can't miss out on that platform. And so that's, I think, the thing that's motivating everybody.
But it's obviously how to do that smart is one of the things that everybody is, I'd say, obsessing about every week.
What do you think about the open source movement versus closed source? You were one of the original donators to OpenAI. You were originally on the board. And there's a couple of ways to go with this question, but I just want to start with Forget about the corporate structure over there. We'll get to that in a second. But I want to talk specifically about open source.
Meta's obviously far behind OpenAI, far behind Google, Microsoft. So they went open source. When you're behind, you go open source, I guess is the idea here. But they're making some big progress. Who do you think is going to win this ultimately? An open source provider of LLMs or proprietary closed source like OpenAI is? And it's confounding to say OpenAI is closed, but closed AI.
Yeah. Look, from the very founding of OpenAI, I was never claiming it was going to be open source. I was claiming it was going to be one safety open access and not differential or controlling access for that. And I think they've stayed true to that principle, which is, I think, what the genesis of the word open is there.
And look, I think the key thing is there's going to be winners all over the place. I think there's going to be winners in the open source side.
And I don't know if Lama is going to win from its open source thing as much as it's just trying to say, hey, we're training these models, so we're going to put them out there because our closed system, closed loop, doesn't require selling for tokens and so forth. But there's also Mistral and other folks who are doing competent models
And then I think that the, but you know, there'll be wins in different ways. So it's not like, I think like for example, you know, I think there's going to be a bunch of different startups they're going to win, whether it's coding agents or, you know, kind of very specific applications within medical or other kinds of things. And I think they will, you know, generate big companies.
And I think large companies like, you know, the hyperscalers are going to succeed as well. Now in the pure model competition, The question is, when do we start seeing a asymptote to scale? And my guess is, and kind of the GPT landmarks is each order of magnitude, my guess is the soonest will be GPT-6. And it may even be after that.
And that's part of what the bet that OpenAI and Anthropic and the hyperscalers are all making is that that return to scale. And then that has a lot of downstream effects because even if you say we can train smaller models to do effective things, part of what's going to be really instrumental for training those smaller models is the larger models.
So even if there's a bunch of smaller models that are specifically capturing other kinds of market opportunities, which is part of what I've been doing and investing in AI since 2014, 2015, there's going to be a set of those things that are all a whole bunch of startup opportunities.
So I think that the A versus B is a good dramatic framing, but it's really on which specific opportunities, because there's going to be wins and opportunities across them.
Sorry, just real quick. Do you think there's one LLM or one foundational model read that effectively does everything like a meta model that starts to take most of the market or does different... versions of smaller models or small agents that kind of network together, end up being the best solution for specific applications and verticals. Like how does this evolve over time?
Like everyone's got this concept that there's a God model that does everything and wins. And whoever gets the God model wins everything. But the reality of software and principles of biology would indicate that you'll see like smaller network things that are better at doing things than any one big thing. And I'm curious to hear your point of view on the philosophy of that.
Yeah. I think the mistake that people make is they think precisely it's like the one model to rule them all. It's like Sauron's ring. And actually, in fact, already today, like for example, one of the things that
happens with all the model providers at Microsoft and OpenAI, which I've seen, is they'll sometimes sub in, like GPD 3.5, as it was before, to see what the answers are, because there's a cost of compute. Even as you learn to bring the cost of the compute of the larger models down, the larger models are always going to be a lot more expensive.
And by the way, they're going to be more expensive kind of probably loosely on the order of magnitude, right? So it's like, well, it's 10x larger, it's 10x more expensive. And so when you're trying to say, hey, I'm trying to make business models work,
Or language translation, right? If I just want to do language translation, I don't need a massive model. I just need a model that's really good at language translation. Exactly.
And so what I think you're going to see is networks of models and like kind of traffic control and escalation and all the rest. And agents are not going to be one model. They're going to be blends of models. And that's one of the reasons why you say, well, there's actually, in fact, a lot of room for startups. Because it's not like we say, well, we take GPT-7 and we just serve it for everything.
It's like, well, it's going to be super expensive. And there's a whole bunch of things about serving it more cheaply. And for example, one of the really great technical papers that I love from Microsoft is, all you need is textbooks.
It's like you can train very specific models on kind of like high quality data, along with, by the way, the larger model helping train it, that all of a sudden you have a functional smaller model. And, you know, the question will be a blend of these things. So I think the multi-model approach is, I think, going to be, you know, quickly universal.
What is your take on IP in this new era? We see OpenAI, and you're not on the OpenAI board anymore, right? So you're independent of that, even though you made a big donation at some point.
Donation and investment. I led the first commercial series, first commercial round.
So you're an investor in it, and you donated to it. Actually, let's start there. What's up with that? corporate structure. How do we make sense of that? Something's a nonprofit, you donated to it, and then you invested in it, and everybody's making money and selling in secondary at $100 billion. How does that work in the world?
So it's a 501c3 is the governor thing, that's what started. And when Elon and Sam were starting this and said, look, we need philanthropic support, and we're trying to make sure that there is open access to AI, which is gonna be an instrumental technology, and we've got some great technologists who wanna come do this, we started as a 501c3 for doing it. That persists, as far as I know, till today.
Then one of Sam Altman's pieces of genius was that he kind of said, look, we're gonna need scale capital and I'm trying to go out to raise, and the commercial round was 600 million, I'm trying to raise 600 million in philanthropy and it's not working. So I have this idea, which is the 501c3, which is doing this kind of research mission of AGI for humanity is also producing commercial benefits.
And we can create initially an LP, which has a kind of a revenue right on the commercial things that investors can invest in. And Reed, it'd be really helpful if you led this because, and I was like, well, but you don't have a go-to-market plan. You don't have a... product plan, business plan. He's like, yeah, but we need to show that we're actually serious with the business.
And I said, all right, fine, I will lead it from my foundation. Because even though none of these things we like to see as investors were there, but I was like, look, okay, I'll lead it as an investment, I'll manage it as an investment, but I'll do it as an investment for my foundation in order to do this.
And, and what, you know, you know, kind of that was kind of as we were beginning to get into, you know, like, kind of, we, we hadn't seen anything, they were still doing Dota and, and robot hands and much of this. So it was like, we're betting on the scale thesis of generating something magical. And so we hadn't seen GPT-3 yet.
And of course, once that started coming, then it was like, well, we need a bunch more capital, let's do a strategic strategy. you know, connection and let's talk to all the hyperscalers and let's work out a deal by which one of them invests in us. And then, you know, the Microsoft Open AI deal came together with, you know, converting the LP into a subsidiary of the nonprofit.
kind of saying, look, there's all kinds of benefits that both OpenAI and Microsoft can get from a business deal. And so that's what's led to the structure that I was familiar with before I left the board.
What did you think of Elon's first lawsuit, and then he dropped it, and then he refiled? Where do you think he's coming from?
Well, what is the, I'm not very charitable about those lawsuits. I would like to be, because Elon's one of the entrepreneurial heroes of our time and generation. But I think it's the, I think it's, you know, frankly, I think probably the most charitable thing to say is sour grapes. Because, you know, for example, I know Sam offered him as much of the investment round as he wanted, right?
Like he could have done the whole thing. He could have let it, you know, it was kind of like, hey, look, we still love you. And he was like, no, it's not a company that I control. It's going to fail. So I'm not interested in investing. And I was like, okay, right. And so now you're getting these lawsuits that are like, you know, like I was misled.
And it was like, you were offered everything at every opportunity other than converting OpenAI into a company that you completely owned. And so, you know, I think it's without basis, without merit.
But why do you think he would have dropped it and then refiled? Where do you think that comes from? Is there new information, do you think?
I think it was a jurisdiction issue, Jamal. Oh, that makes sense. I can track that.
But, Reid, I mean, Elon put in the first, what, $44 million, and he doesn't have any shares. Yeah.
I, by the way, put in $10 million at the same time, and I don't have any shares from those $10 million.
But do you think that he kind of got screwed because he doesn't have any shares? I mean, at the time he put in the $44 million, it was never going to be a for-profit. Now it's a for-profit. A lot of people are profiting, assuming the paper mark ends up being realized. So he doesn't own anything.
I mean, if you were the seed investor and put up $44 million in something and then everyone's making money and you don't have any shares, forget about the legal technicalities. Wouldn't you have a feeling of being screwed?
Well, look, I can understand the emotion of that, but it's not like Elon's short of money, right? And so if you go, look, I'd like to have shares like I did, invest in the other thing. I didn't get any shares for the 10 million that I put in. And by the way, it's not just legal technicalities. It's actually really important that you're not doing private enrichment off philanthropic donations.
And so, you know, it's... But isn't that what's happened? No, from a viewpoint of... they're held separate, right? And so, you know, and the 501 continues to control the, you know, kind of control the kind of the mission and destiny and so forth.
And so the question about its mission is still guiding things and you're essentially investing in that mission and you recruited people, you know, on that mission. And so, you know, I think that the, you know, you know, I think, like I said, sour grapes,
Okay, so let's get into some political stuff. First, I want to get the IP question, then I want to talk about Lina Khan. So how do you think about IP in this, you know, briefly in this new world? OpenAI and New York Times can't come to terms. New York Times caught them red-handed, cookie jar, according to their lawsuit, having indexed a ton of their content.
It's pretty crystal clear that their content's behind a paywall, and that's how they make money. I also subscribe to ChatGPT. I give them 20 bucks a month, maybe 30 bucks a month for every employee in my firm. And I get New York Times content from there all the time. I will ask it, what is the wire cut I think is the best choice in chat GPT? I get that. And then I get the answer.
And I don't need my New York Times subscription. I don't visit the New York Times anymore. Feels pretty clear cut to me. But how do you think about IP? Should an LLM be able to ingest whatever they please? Or should they be required to get permission in advance and pay a royalty to content creators? Reid Hoffman.
Well, as a content creator too. Look, I think that it tends to be a little bit of a, we do want content creators to benefit economically from the work. It's part of the reason why we have copyright. It's part of the reason why we have payrolls, you know, other kinds of things that I think are very important. And I think it's a complicated thing that needs to be sorted out.
Now, that being said, I think we also want to say that we can train these models, like, you know, like training is like reading and like reading things is, you know, like when something's available to be read and you've engaged in the right economic thing for reading it, I think that's a kind of a reasonable fair use thing.
Now maybe we update the terms of service, maybe we update copyright law and other things to say, okay, that now changes. I think we don't want to forbid changes in the future. This is one of the problems we get, it blocks innovation when we do that. It blocks innovation in kind of Hollywood, it blocks innovation in music, it blocks innovation. So you want to allow some new changing landscape.
And I think this is a changing landscape that arguably is reading. So I think that, Both of those things are true in terms of what do we want to sort through. I think that one of the reasons why this is kind of like, when I give advice to various news organizations and so on, I say, look, don't try to hold out for money on the training side of things.
because we're gonna create synthetic data, we're gonna do all kinds of other things that are gonna mean that no one's particular data is really going to matter. What you should be is on freshness, on brand, on other things, and we should work out ongoing sustaining economic arrangements like that. That would be my two cents suggestion for it. And I do think we wanna design an ecosystem
that includes that, and when I was involved in those conversations at OpenAI, they agreed with that. Microsoft certainly agrees with that in terms of how do we make sure that economics are fairly apportioned and so forth for what we're doing for this phase of, and ongoing, but there's a current new technological wave that's coming, and how do you do that?
So that's a messy answer, but unfortunately it's a messy subject.
It's a pretty messy subject, yeah.
Before we move to politics, I just wanted to actually ask you about inflection. So is it still running? Yeah. And so what basically happened, there was like some transfer payment from Microsoft and a couple of the people like, and then it seems like whatever that deal was, a little bit seems to have been copied by Google when they did this character AI thing.
So just trying to get a sense from you, are these deals to structurally avoid FTC scrutiny in terms of the building blocks of it? Or how did you think about it? And what is the pattern and the trend on these things?
Well, the thing I think that's happened was, you know, very early days, you had things like, you know, we're doing an agent and if Pi had launched before ChatGBT, it'd probably be in a different circumstance, but like ChatGBT got the, oh my God.
I'm sorry, Pi is the inflection AI product.
Pi is the inflection agent, yeah. And so by the time that Pi, we got the trend right and the interest of the market right, but we got the timing, you know, too late, happens with startups. So it was like, okay, we need to pivot. We need to pivot from a B2C model to a B2B.
And we have a unique model, but let's sell that to other people who already have audiences, because we're not going to be able to easily grow our audience. And then, you know, once we had that as a conversation, there were employees like, well, we want to do the direct agent thing, and that's what we want to do. And maybe we'll go somewhere in order to do that.
And we're like, okay, how do we fund this? And how do we make that work? And how do we make it work for investors? And we said, hey, there's a deal structure that could work, which is with a kind of outside party, you can get paid enough in a non-exclusive IP license and an ability to selectively hire folks. And then you can dividend some of that out to investors.
So investors get back kind of a 1X and then kind of an ongoing position. So as investors, it's great to have a kind of optionality on its B2B business in order to play that out. And this is a structure that works for everybody in this pivot to B2B. And that's essentially the structure that we did. I see.
Great pivot, Chamath, into Lena Kahn. I think one of the things that is quite paradoxical about your relationship with David Sachs is you both agree on something in politics, which is Lena Kahn, And her concepts around future competition and maybe how she's running this issue for the United States is leading to basically a freeze on the market.
We're seeing weird deal structures like some of the ones we're talking about here that could have just been acquisitions. And I'm curious your thoughts on What she, you know, this sort of breakup of Google, now we're seeing that emerge at the same time that they're facing the biggest existential crisis of their career, which is language models competing with them.
And I mean, I would say half of my Google searches have already moved to chat GPT-like services. So what's your take on Lena Kahn's approach to M&A? And what impact, if it's continued and sustained, will that have on capital allocation? Because I don't know what happened to the single and double M&A market, but it seems to be completely gone.
Everything from Adobe and Figma to other mergers that could be happening are essentially frozen. So what's your take?
So it was funny, because I kind of made an off-the-cuff, you know, kind of remark about Lena Kang, which turned into a whole news cycle.
I saw you on CNN where they were like, are you telling Kamala and Biden what they have to do?
And I'm like, no, because I don't believe in that kind of corruption of politics. The only way she's going to learn about it is either she asks me or she watches this television show. And so... So she's done a good job on the price cartels, she's done a good job on the anti-competes, both of which I think are very good for competitive markets.
The problem is I think she has a misunderstanding of these large tech companies. And for example, on the M&A thing, her theory is you gotta prevent the aggregation of power, so you gotta fight every acquisition of note. And the problem, of course, is that actually quells venture capital investment.
It's just like, okay, part of the returns is if I'm going to invest in something that might be competing with one or more of the large tech companies, I need to have acquisition exits as part of being able to fund enough capital to really make that acquisition, that investment possible. Because if it doesn't work, I want to be able to at least recover my capital by an investment.
So the right way to look at it is, is there competition amongst the top tech companies. Because if one of them is like squashing all the other ones, that's a problem. If we're five large tech companies heading to three, then I'm much more sympathetic to our point of view. But we're actually five heading to 10, right? Or five to seven heading to 12.
Because like Nvidia is now in the mix and others I think are coming in the mix.
Tesla is now over 500 billion, yeah.
Yes, and so you have this ability. So the thing is, is they're competing on the acquisitions just like they're competing in the marketplace.
And if you're trying to quell the whole thing, because your theory is like they should just, you know, the startup should just be able to grow up to compete, that actually means that those will never get the capital that they need in order to do that, which means you're actually having the opposite of your intent, right? What you're doing is you're actually making there be less competition
Because, you know, capitalists can't say, if I'm gonna put 100 million, 500 million, a billion dollars into this company, I at least have a chance of getting my capital back, or I can possibly create a competitor. And that's the reason I was speaking out against it as an expert. It was interesting.
I saw you, I think it was a Jake Tapper who kind of grilled you on it. I thought you did an exceptional job of just saying, listen, I made a donation. This is how I feel about it. But obviously, she's going to do what she wants to do. And that's just how politics works. So I thought that was actually pretty well done.
And I actually appreciate you fighting for more M&A because it would be great for the industry. Zach, you want to throw up a political topic here or you want me to- Well, no, just to stick on Lena Kahn for a second.
So I agree that her approach has been overly broad and has had a chilling effect on M&A. And so, J. Cal, like you said, we've lost those base hit- acquisitions that I think are important to the venture capital market that help new startups get funded. I mean, if the returns on risk capital go down, there's going to be less of it. Yeah, so I agree with Reid on that.
The area where I'm not sure we agree is, and where I do agree with Lina Khan, is I do think the big tech companies have too much power. I do think that they are monopolies or have monopolies And I do think they need to be controlled. I just think that, you know, I wouldn't prevent them from doing any M&A whatsoever.
I'm curious if Reid, like, agrees with that, that the big tech companies have too much power or agrees with Lena Kahn on that. And I guess specifically, do you think any big tech companies should be broken up? If so, which ones? I mean, I would actually entertain that idea of deconglomerating or breaking up some of these big tech companies.
Do you think, do you agree that big tech is too much power or not?
I think it's TBD. But the reason I'd take the opposite point of view and say no, the thesis for no is that they are very strong American companies that get, in most cases, over half the revenue from overseas. They create technology platforms that beneficially differentiate the US versus many other countries in kind of global circumstances like the internet and other kinds of things.
I think that they are competing ferociously with each other. You know, Jason just mentioned that, you know, it's kind of like, look, we've already got like chat GPT competing with Google search and other kinds of things. And I think it's competitive pressure, right? This is, I think what capitalism is about is competitive pressure that essentially creates the thing.
And that's the reason why, like, if it's, if, if we were shrinking, like it was Google Uber Alice, or I actually frankly think that the, Everyone likes to talk about Google. I think the prime candidate is likely to be, and I'm speaking as an individual and as a venture capitalist here, is Apple with the App Store, right?
Okay, so wait. So that brings up an interesting point. One of the things we've talked about in this pod is that we shouldn't shut down M&A, but the FTC should limit anti-competitive tactics by these big tech companies. Yep. Apple, really good example because they drive everything through the app store. You're not allowed to do side loading. They want to take, what is it, 30% piece of any sales.
You're not even allowed to have a link inside an application to drive the user to the website. Except in Europe now.
Yeah. In Europe now, you can.
So would you at least want to crack down on those anti-competitive tactics? Yeah.
Yeah, no, for sure. And look, especially when, you know, we all know it's nonsense. It's like, look, you could just give the consumers the option to allow sideloading. You could just say, it's technically very simple to do. And you can say, look, we don't want you to sideload because we view it to be safety and security, but we're giving you the option, right? Fine, give people the option, right?
Right.
Reid, were you surprised that then the first target where there was like some successful antitrust pushback was against Google versus Apple? And then second, do you think that there's a chance, like a meaningful chance that the government tries to break Google up? Or do you think it looks something maybe more similar to what happened to Microsoft?
So I think in mandating breakups... you know, like I think is a, look, I think we should operate through competitive networks and competitive ecosystems. I think it's part of what's smart about capitalism. And I think mandating breakups is only when essentially capitalism is failing on specific things. You wanna do the least,
the least you can to get back to competitive networks in terms of how you're operating. And so when you say, hey, look, iOS has this kind of monopoly, and you say there's no side loading, you have to use App Store, you have to use the payment mechanism, et cetera, et cetera, it's like, well, that quells a ton of startup innovation.
We all know this as investors, because we look at anyone who's prospectively doing a business like this and say, no chance, you're not going to succeed. And so then you say, well, what's the least thing that we can do, right? And, you know, a classic Andy Truss was like, well, let's break off the app store from Apple as well, right? Unclear that that would really fully work.
You know, that's like socialism mandating how the thing should work. Let's try to get it so that we allow competition to determine these things. And like, for example, saying, hey, like you have to allow consumers the option of sideloading. You have to allow consumers the option of installing an alternative app store, right? Like that kind of stuff. I think, you know, what's the minimal set?
I think that's the kind of intervention we want to have because I think there's all kinds of benefits that come from- But why do you think that the case against Apple has made less progress than the case against Google? I think it's less politically easy, right?
It's kind of like everybody loves their iOS phone and there's less of a blue and red kind of combo tackle where the blue feet people are like, hate big companies. Apple's less offensive, basically. Yes.
More stylish. They're prettier. I kind of like your approach, though, with the App Store. If you were to think of least harm to the ecosystem, Epic Games has their own App Store for games. They charge 88%. I'm sorry, they give developers 88%. They only take 12. And forcing Apple to allow a startup to do an App Store would solve the entire problem. And it seems like that's where it's going to go.
And all five of us would invest instantly in an App Store that would say 0%. take rate, and all advertising based. What a great idea that would be.
Yeah, exactly. Reid, I have a question. A few weeks ago, you said something to the effect very publicly that you had had a one hour or multi hour lunch with Biden. And he just seemed like super on his game. And then he was kind of dumped. Was that just a moment in time where he was really great with you?
Or how do you reconcile that with Pelosi and all of these other folks and what happened to Biden?
Well, like most of us, I was pretty dismayed by the debate performance.
Because when I talked to him, detailed, thoughtful analysis with no notes on Gaza, questions about AI, and what kinds of things, what did I think about what the progress, the thing they were doing with the voluntary commitments, the executive order, and what kinds of things should happen in the future, and all that kind of stuff, being on the game a little slower, Right.
Then then, you know, a 50 year old would be. But but, you know, like cogent and totally worth it. And then you kind of looked at the debate, oh my gosh, this is a disaster. And so it was like, look, is the debate a one-off thing? Were you ill?
Like trying to reconcile the two and spent a little bit of time trying to figure that out to what was going on because it was the first time I'd seen something like that. And, you know, you know, I don't you know, I'm not enough of a D.C.
insider to know exactly what the set of conclusions were other than I, you know, I plotted, you know, Biden for having the kind of integrity to go, look, I'm maybe I'm ill, maybe I'm old, maybe I'm slower, but. You know, it's about the country more than it's about me because I'm, you know, not, you know, it's important to be about the country, not about yourself. I'll step aside.
And ultimately, it's a decision. There's nothing that anyone can force. Pelosi couldn't force it on anyone else. It's ultimately his decision. He came to that decision. So, you know, I applaud that.
Do you think that they should have run an open primary after that? And would Kamala have won an open primary?
Well, it's hard to know. I mean, I think they were definitely leaning towards an open primary, and then all the people who would be the most natural contenders all endorsed Kamala. And by the way, you say, well, kind of democratic process. It was like, well, there was a democratic process that picked the Biden-Harris ticket, which turned into the Harris-Waltz ticket.
And so that's not anti-democratic. But I think if you look at the sequence of events, it was kind of like, well, you know, we're going to sort out, you know, what we're going to do. And then, you know, all of the key folks, you know, Shapiro and Whitmer and everyone else all endorsed Kamala. I was like, okay, let's just, let's get back to, you know, kind of the choice of two candidates.
And so I, you know.
Do you feel the voters felt, Reed, do you think the voters felt left out? the Democratic voters?
Well, I mean, from post fact, seems not, right? With the level of kind of energy and all the rest, it seems that with the pure polling and kind of level energy and kind of what's going on. They're happy with what they got. Yeah, they're happy with what they got.
I would have liked to have that speed run. Do you think it sets a bad precedent that there were these back room conversations? Obviously, The staff of Whitmer, Moore, Shapiro, their office speaks with Democratic Party leadership, speak with big donors.
And there was effectively a coalescing that took place over a period of time that said, we should all stand behind and endorse one person instead of infighting and creating a split in the party. And does that not set a bad precedent that there is a small group of people in either party...
that in a primary process effectively get to nominate their candidate, get their candidate to become the nominee. And therefore there's only two people for the country to choose from. And as we have seen recently with RFK Jr. and the lawsuits against him in being on the ballot in different states, it makes it very difficult maybe for the people to have their choice.
And is that a bad way for democracy to work? And I just love your philosophical view on this. I'm like, what's the best way for democracy in the United States to work?
so for the president for the president yes we do live in a republic all right and there are there is various like you know some people have much more influence than others um whether it's media platforms whether it's um you know economics and ability to spend whether it's you know a history and a brand and and and other things and so you know this melee and and and kind of
you know, whole integration set of things. Now, ultimately, you know, voters are going to decide in November, right? So, you know, people do have a, you know, and I think that staying to our democratic process is what's really key. Like, you know, people go on the polls.
You know, I think we should want to live in a country where everyone does, you know, everyone who is legally allowed to vote does vote. And I think that that's you know, ultimately a good thing. Now, you know, are there things that I would like to change? Sure. I'd like to change. I'd like to have ranked choice voting. You know, I'd like to have open primaries.
There's a set of things like, like actually my principal frustration in all of this stuff is, you know, what's, what's one of the fundamental things that the two parties agree on that, that, that, that shouldn't be is that there should be only two parties. Right. And I think that's, I think that's something that you, you need to fix and you can't fix it
Unfortunately, I think with independent candidates, because the whole system is really set up for kind of two parties and independent candidates are almost always spoilers one way or the other. I mean, like on the RFK stuff, I understand there was a bunch of Democrats who were trying to prevent him from getting on the ballot.
I actually prefer him on the ballot because I actually think his anti-vax stance really fit very well. with Trump. And so I think he was going to take more from Trump.
Do you want to address that, Reid? Because I think there was a rumor that you were funding some of these lawsuits to keep him off the ballot or whatever. Have you spent any money to try to impact RFK one way or the other?
I wouldn't be surprised if we look at all the money that goes to all the different organizations, if Organization X kind of had some kind of ballot thing. My voice and instruction was always like, no, no, no, don't do that. That's anti-democratic. But you can't control everything just like you invest in a company and CEO sometimes the dumb ass that you can't do anything about.
Because you give money to folks that then execute their own strategies. So you can't control on the ground tactics, right?
Yeah.
So there's that happens that you're like, no, don't do that.
Right. Well, okay. That's a good segue. Right. Let's talk about the five cases against Trump. There are five lawsuits against Trump.
Hold on, J. Cal, can we just stay on this topic for a second? I think this is important. Sure, of course you can. Okay, so in Michigan and Wisconsin, you had Democratic groups. They fought. RFK Jr. 's bid to get on the ballot. Okay, they failed. Now he wants to get off the ballot, but they won't take him off now that they think that his presence hurts Trump.
And at the same time, Michigan's trying to remove Cornel West and Wisconsin's trying to remove Jill Stein. So I'm curious, do you think there's any principle on display here besides naked partisan hackery? I mean, basically, the Democrats fought... having third parties on the ballot when they thought it would hurt Biden.
And now they want to keep them on the ballot when they think it's going to hurt Trump, except for those third party candidates who they still think will hurt Harris. So is there any principle here or is this just partisan hackery?
I think it's, I frankly think that everyone who follows the legal process to get on the ballot should be on the ballot, and we should follow the legal process. I'm very much of a legal process kind of person. What I'm opposed to is calling Raffensperger and asking for 11,000 votes, which is not legal. So yeah, sure, is that bad, and do I advocate against it? The answer is absolutely yes.
But it's – follow the legal process.
If the Secretary of State of Colorado throws Trump off the ballot, for example, is that legal process if it's then overruled by the Supreme Court? Or can we just say substantively that states shouldn't be removing candidates from the ballot? That's anti-democratic.
Well, but you want them to remove RFK from the ballot.
No, that's not what I said. Oh, OK.
I'm just trying to figure out.
No, no, no. The rule is that – well, first of all, I don't think that Democratic groups should be suing RFK to keep him off the ballot. And that's what he said is that Democratic groups were suing to keep him off the ballot and they were trying to exhaust his resources so he couldn't mount an effective campaign. And some of those groups you funded, right?
So maybe you didn't know what they were doing. But in any event, I consider that to be anti-democratic. RFK is now trying to remove his name from the ballot. I think as a candidate you're allowed to do that. And those same groups that once fought to keep him off the ballot are trying to keep his name on the ballot. Oh, really?
Yeah, because now they perceive the political calculation to be a little different. So I don't see any of this as being democratic. This to me is just partisan hackery, isn't it?
Can't you agree with that? Look, yes, fundamentally from a viewpoint of like, for example, my direct actions, and yes, you fund a whole bunch of different groups and you have different groups doing different things, but you funded them to do this thing that you were thinking of and things happen. It's just like companies.
My thing was actually, in fact, making people aware of RFK's anti-vax statement, his anti-science stuff, because I thought that would be relevant in the polls in November. That was the actual strategy that I believe. And I think that would differentially hit Trump more. And so, therefore, it would be a spoiler. right, as these independents are.
I have no problem with drawing attention to issues, but I do think fundamentally it's anti-democratic to sue third party candidates to the point where they can't be on the ballot. Okay, let me ask you directly, Cornel West. There's an effort right now to remove Cornel West from the ballot in Michigan. Do you support that or would you oppose that? I mean, is that democracy?
By default, I would oppose it. I don't know any of the details.
Okay, fair enough.
Reid, I have a question for you. It's more of a statement, actually. Maybe I'd just love to get your reaction. One of the most divisive issues that we have right now is people's position on October 7th, Israel, Palestine. There is a sense that there's a growing kind of like virulent strain of anti-Semitism in America. A lot of people point to the extreme left as where that's really gestating.
There was thoughts that Josh Shapiro would have been an exceptional candidate, but one of the large reasons why he was not really meaningfully considered was his religion.
I just want you to comment on the broad issue and whether you see it in the Democratic Party, whether you see it in the Republican Party, whether you see it at all, just give us a sense of where we stand culturally on this issue.
So I know Josh Shapiro. I think he's great. I've broken bread with him and he was meaningfully considered. I think we should be so lucky that he would run for presidency someday, some year. I actually didn't know Walt at all and was initially kind of surprised because I was like, oh, I thought it was probably going to be Shapiro.
And I was like, well, I think it was probably a close call down to those two. And it looks like in making decisions, I think Harris made a good decision with Waltz. So I think it's a... Now, on the anti-Semitism topic, I do worry that
you know, broadly, we're seeing, you know, kind of more rise of anti-Semitism and that's extremely important to fight, you know, because I think, and I think there are people in the, you know, it's a weirdly like, there's some lefties who are doing it and there's some righties who are doing it. It's both a blue and a red issue in different shape. And I think it's very important that we,
you know, we stand against that as a country. And so, you know, I've been, you know, kind of mostly just trying to say, hey, look, we gotta be anti-racism, anti-Semitism, and also anti-genocide. And we gotta figure that out.
What did you think of Kamala's handling of that issue in her speech? She basically... seemed to, I don't know, say both sides of it, but she said, hey, you can believe that the people of Gaza should be treated more humanely and that, you know, Israel has a right to defend herself.
What'd you think of her handling of that? I think that's rational, right? Like you should be anti-genocide both of Palestinians and of Jews. Right. And and like it's obviously a very, very thorny topic. Yes. Right. So so I think, you know, saying that I'm going to try to protect civilians on both sides, anti-genocide, I think that's a human caring place to be looking out for people.
Reid, do you think that, generally speaking, Marxist socialist principles are taking a firmer hold on the Democratic Party? And kind of those principles are starting to showcase not just in the cultural phenomena that Chamath is referencing, but also in some of the policymaking that's going on, and concepts of equity
rooted in concepts of social justice, ultimately rooted in Marxist principles emerging from the Industrial Revolution. What about price fixing? So as an example, the price gouging, you know, price caps on food proposal,
the concepts of a wealth tax, not necessarily the unrealized capital gains tax, but separately a tax on wealth, all of these concepts of the degradation of power structure through policy. And in part, some have argued that the antisemitism arises from these principles and that the Jews are considered a privileged and powerful cultural class. Is that not being observed?
Do you not think that there's some tendencies that are emerging in the Democratic Party and maybe influenced by a louder far left and that far left is becoming more loud and better represented in the party?
Look, I think we should speak out against both the far left and the far right. I think it's important to do both. you know, since, you know, I'm playing the Democrat here on this conversation, I'll ask you guys to play the, or especially Sachs, play the Republican and speak out against the far right too. But the short answer is, yes, there are amongst the extreme left, that's not everybody in the
misunderstandings about why it's important to defend anti-genocides like, from the river to the sea. It's like, yeah, that's a genocidal statement. Don't use that one. Understand what language you're using. And to be like, look, we've had a great genocidal moment with World War II, and we're still trying to recover from it.
Two, questions around what I think is a foolish wealth tax, even though it's, by the way, narrow to like 80%. And then on the price gouging stuff, you know, one of the things is I started scratching at it, you know, it was interesting. I think this week Kroger said, yes, we did actually artificially raise prices to profit from the pandemic, you know, and yeah, you should stop price gouging.
It's not quite the same thing as price capping. And apparently there's laws that affect even in Florida, right. Or in Texas where some of, you know, you guys are living. So like, it's kind of interesting. It's like, okay, I need to understand this issue in more depth, but I don't think it's as simplistic as the political headlines are having it.
Well, but the reason why Kamala Harris proposed the price fixing proposal, price gouging, whatever you want to call it, was in response to inflation. In other words, we've had 20% erosion in purchasing power over the last four years. Harris needs a response to that. So she came forward with this new economic proposal. So it's in that context this came up.
This wasn't some proposal by the far left of the party. unless you consider Kamala Harris to be far left, I actually do. But okay, fair enough. But my point is just, this is her proposal. And it's in response to inflation. I mean, you understand what causes inflation, right? It's like the government printing too much money. It's not greedy corporations raising their prices too much.
I mean, do you agree with that?
Look, I agree that you have to have good monetary policy. And so I think we probably agree on that. And I think some printing of money is part of the normal functioning economy, but too much is...
is bad and I don't think look I think price it look part of the reason why we just talked about antitrust stuff earlier you do have to look at places where there's a there's a possibility of kind of commanding stuff from your your privileged position and like you know the like I want to go we all agree we all agree that monopolies have to be controlled no no no debate there but that's not what's caused the inflation right because we've had inflation of commodities not just monopoly products but commodities like just food staples eggs you know
chicken, stuff like that.
Driven by fuel and labor and all the other inflationary underpinnings of those markets. And I think we tried to highlight that. I don't know if you saw Elizabeth Warren's interview on CNBC where she got taken apart because she made some claims about profiteering by Kraft Heinz. And the CNBC anchors pointed out you were actually incorrect.
Kraft Heinz has seen a reduction in profit over this period of time. And so there were factual inaccuracies in these belief systems. But for me, it feels a lot like the government setting prices in free markets is one of those steps towards socialist principles that worry me the most.
Yeah, and look, I, generally speaking, as I was saying earlier, I'm like, make sure the network sorts it out versus centralized control. Totally, totally. So it's kind of like you have to look at, is there a place where you're going, okay, that's the reason I focused, her words were price gouging.
And if you're focused on the kind of gouging side of it is like, oh, there might be a market inefficiency that you're essentially correcting, then that's I think the same kind of thing we were talking about with like the FTC and the Apple App Store and so forth. If it's like the, I'm just gonna set a fixed price on eggs, right? That's a bad idea.
And by the way, there's bad ideas like the wealth tax thing that I disagree with. Her economic thing also had housing, which I think is a good kind of thing to kind of lower costs for Americans and kind of make that kind of stable work. Like, I think she's been good on immigration.
I think the Langford Cinema bill, which was from the Republican side, was something they were fully prepared to endorse. And Trump killed it because he wanted to campaign on it. It's like, look, we care about the actual running in the country. I think there's a bunch of good things, but if you said, do I defend price capping? The answer is not as an independent principle by itself.
And by the way, are there people lefties? Like, you know, a lot of what Elizabeth Warren says about capitalism, I disagree with, right?
I mean, I could disagree with you on the border. I think, you know, Kamala... Harris used to be considered the border czar that's gotten scrubbed. I don't think she's done a great job on that, but whatever. I want to go back to issues that affect Silicon Valley. 25% unrealized gains tax. It seems like most of Silicon Valley, almost all of it, either disagrees with this or is up in arms about this.
I think, J. Cal, you said that this is disqualifying. It's a line in the sand.
It's disqualifying for me, for sure. Yeah.
So, I mean, do you agree that a large unrealized gains tax, 25%, would be a disaster for Silicon Valley and the whole startup ecosystem? Or, I mean, how do you come down on that?
Well, as I understand it, on that tax as it's proposed, is you have to have 80% of your net worth liquid.
Yeah, if 80% or more is illiquid, then... No, you get to defer the tax, but there's a penalty. Yeah, you get to defer the tax credit as a penalty. That's right.
Look, I think it's definitely a quelling impact and it's definitely stupid and definitely shouldn't happen. Okay. So it's stupid.
I think we got your position on it. It's stupid. I want to finish.